InvestmentNews INsider

The INsiderblog

InvestmentNews reporters offer their take on intriguing or controversial articles from around the web.

INsider: Pandit exit could pave way for Geithner, analyst says

Surprise departure of Citigroup boss leaves Richard Bové flummoxed

Oct 16, 2012 @ 4:05 pm

By Andrew Osterland

Who did in Vikram Pandit? By most accounts, the former hedge fund manager turned global banking CEO did a great job saving Citigroup Inc. from ruin after taking the job in 2007. Sure, Citi needed a government bailout to avoid bankruptcy — as did several other major U.S. banks. But it's hard to fault Mr. Pandit for his job in the corner office since then.

Yesterday, the bank reported solid third-quarter financial results. A big write-down of Citi's stake in the Morgan Stanley Smith Barney brokerage joint venture pulled reported profits down, but the bank continues to show improvement. “He's done a phenomenal job and he got screwed,” said Richard Bové, a banking analyst with Rochdale Securities LLC.

A "person with knowledge of the [board] discussions" who spoke to Bloomberg said the $2.9 billion Smith Barney-related write-down was one factor. The source also noted Mr. Pandit's inability to get the OK from regulators to boost the company's dividend earlier this year, as well as the two-notch credit rating downgrade from Moody's Investor Service.

"Those are all peripheral things," Mr. Bové said. "Citigroup is aggressively going after international business and aggressively cutting costs. He's been one of the most successful executives in the banking industry."

Mr. Bové, like other analysts following Citigroup, is at a loss to explain the sudden ouster — and it was an ouster, despite Mr. Pandit's memo to employees stating otherwise. “He was in complete control on the [earnings] conference call yesterday and I don't think he had any desire to leave the company,” Mr. Bové said. “There's a lot more to this story.”

How about this? Treasury Secretary Tim Geithner quits his job after the election and takes over as Citigroup chairman. Mr. Bové said it's not such a farfetched idea. “He doesn't want to be a two-term Treasury secretary. And what better place for him to land than Citigroup?” Mr. Bové said. “Like everybody else, he wants to shrink the U.S. banks. Maybe he needs to control one to do that.”

Of course, incoming CEO Michael Corbat — a career Citi hand — may not be so keen on the idea.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

INTV

Diversity & Inclusion Awards: 2018 nominations are open

Editor Fred Gabriel and special projects editor Liz Skinner discuss the nomination process for InvestmentNews' inaugural Diversity & Inclusion awards.

Latest news & opinion

Cetera reportedly exploring $1.5 billion sale

The company confirmed it's talking to investment bankers to 'explore how to best optimize [its] capital structure at lower costs.'

SEC Chairman Jay Clayton outlines goals for a new fiduciary standard

Rule should provide clarity on role of adviser, enhanced investor protection and regulatory coordination.

Advisers bemoan LPL's technology platform change

Those in a private LinkedIn chat room were sounding off about fears the independent broker-dealer will require a move to ClientWorks before it is fully ready.

Speculation mounts on whether others will follow UBS' latest move to prevent brokers from leaving

UBS brokers must sign a 12-month non-solicit agreement if they want their 2017 bonuses.

Maryland jumps into fiduciary fray with legislation requiring brokers to act in best interests of clients

Legislation requires brokers to act in the best interests of clients.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print